31 U.S.C. §5318 — Compliance, exemptions, and summons authority
BSA core compliance section. §5318 imposes the foundational BSA duties on covered financial institutions (a definition that under §5312(a)(2) and FinCEN regulations at 31 CFR §1010.100(t) reaches "loan or finance companies" and other nonbank residential mortgage lenders/originators). The operative §5318 duties directly applicable to a [LENDER] subject to BSA include: (subsection (g)) reporting of suspicious transactions (SARs) and the SAR no-tipping-off rule; (subsection (h)) maintaining an anti-money-laundering and countering-the-financing-of-terrorism program with the four pillars — internal policies/procedures/controls, designated compliance officer, ongoing employee training, and independent audit function; (subsection (i)) due diligence (and where applicable enhanced due diligence) for U.S. private banking and correspondent accounts of non-U.S. persons; (subsection (j)) prohibition on U.S. correspondent accounts with foreign shell banks; (subsection (k)) records related to AML programs (including the 120-hour rule); (subsection (l)) customer identification program (CIP) — verify identity, maintain records, consult terrorist watchlists; (subsection (h)(4)) incorporation of Treasury's published AML/CFT national priorities into the [LENDER]'s risk-based program. Specific operational mechanics live in FinCEN regulations at 31 CFR Part 1010 (general) and 31 CFR Part 1029 (loan or finance companies, including residential mortgage lenders and originators).
Verbatim regulatory text
Verbatim provisions from 31 U.S.C. §5318 — Compliance, exemptions, and summons authority — each quote is a verified substring of the regulator-published source snapshot, not retyped. Quoted for reference; this is not legal advice. The operational layer (P&P updates, prompts) lives in the regulation update kits.
31 U.S.C. §5318(g)(1) — Reporting of suspicious transactions (SAR)
The Secretary may require any financial institution , and any director, officer, employee, or agent of any financial institution , to report any suspicious transaction relevant to a possible violation of law or regulation.
31 U.S.C. §5318(g)(2) — SAR confidentiality (no tipping off)
neither the financial institution , director, officer, employee, or agent of such institution (whether or not any such person is still employed by the institution), nor any other current or former director, officer, or employee of, or contractor for, the financial institution or other reporting person, may notify any person involved in the transaction that the transaction has been reported or otherwise reveal any information that would reveal that the transaction has been reported
31 U.S.C. §5318(h)(1) — Anti-money-laundering program (four pillars)
In order to guard against money laundering and the financing of terrorism through financial institutions , each financial institution shall establish anti-money laundering and countering the financing of terrorism programs, including, at a minimum—
31 U.S.C. §5318(h)(4) — Incorporation of national AML/CFT priorities
The review by a financial institution of the priorities established under subparagraph (A) and the incorporation of those priorities, as appropriate, into the risk-based programs established by the financial institution to meet obligations under this subchapter, the USA PATRIOT Act ( Public Law 107–56 ; 115 Stat. 272 ), and other anti-money laundering and countering the financing of terrorism laws and regulations shall be included as a measure on which a financial institution is supervised and examined for compliance with those obligations.
31 U.S.C. §5318(i)(1) — Due diligence for U.S. private banking and correspondent accounts of foreign persons
Each financial institution that establishes, maintains, administers, or manages a private banking account or a correspondent account in the United States for a non -United States person, including a foreign individual visiting the United States, or a representative of a non -United States person shall establish appropriate, specific, and, where necessary, enhanced, due diligence policies, procedures, and controls that are reasonably designed to detect and report instances of money laundering through those accounts.
31 U.S.C. §5318(j) — Prohibition on U.S. correspondent accounts with foreign shell banks
A financial institution described in subparagraphs (A) through (G) of section 5312(a)(2) (in this subsection referred to as a “covered financial institution” ) shall not establish, maintain, administer, or manage a correspondent account in the United States for, or on behalf of, a foreign bank that does not have a physical presence in any country.
31 U.S.C. §5318(k)(2) — 120-hour AML records rule
Not later than 120 hours after receiving a request by an appropriate Federal banking agency for information related to anti-money laundering compliance by a covered financial institution or a customer of such institution, a covered financial institution shall provide to the appropriate Federal banking agency , or make available at a location specified by the representative of the appropriate Federal banking agency , information and account documentation for any account opened, maintained, administered or managed in the United States by the covered financial institution.
31 U.S.C. §5318(l) — Customer Identification Program (CIP) at account opening
The regulations shall, at a minimum, require financial institutions to implement, and customers (after being given adequate notice) to comply with, reasonable procedures for—